The Real Reason Toys “R” Us Went Bankrupt

The reason Toys “R” Us collapsed had nothing to do with operations and everything to do with no longer adding value to their core audience.

When companies ignore cultural changes, they die. That’s why Uber was able to unsettle the taxi industry and why Airbnb was able to disrupt hotels.

And it’s why iTunes could replace record stores.

A recent article in ADweek commented on a rebrand that Toys “R” Us is unveiling:

“The Wayne, New Jersey-based chain filed for bankruptcy earlier this month, but that’s not the reason behind the rebrand, according to chief marketing officer Carla Hassan. ‘I believe that we have a beautiful brand that is in need of reinvention,’ said Hassan.’”

It’s a bit late for reinvention. The brand needs an overhaul. Toys “R” Us stopped providing a reason to go into their stores and do business with them. So, people started to simply order stuff on Amazon since it was faster and easier.

And Toys “R” Us wasn’t offering anything more than what you or I could get online. The same is true of taxies, hotels and record stores. They built their own graves due to lack of observation, lack of initiative and by losing sight of why they still matter to the world.

Letting Transactions Replace Brand Relevancy

As stated in a recent article by Deborah Weinswig, “Group operating losses deepened significantly, to $54-million from $7- million a year earlier.”

Heck, why can I have more fun with the employees on Southwest Airlines than I can with employees in a Toys “R” Us store?

When any brand forgets about delivering value, human interaction, information, fun, and discovery, it goes into “automatic mode” reducing the entire relationship with the brand to conducting transactions and forgetting to give more than a place to check out your items.

Human interaction and ingenuity are vital and meaningful. Providing a cashier, a counter to place your purchases and a cash register isn’t. When a brand goes down that road, they get complacent, lazy. boring and predictable. They’re essentially doing the bare minimum rather than offering the most inspired part of their brand.

So it was complacency that killed the brand, not other “outer causes.”

What Could Toys “R” Us Have Done?

They could have offered “discovery rooms.” Or “Plug and play” rooms with digital devices. Or spaces designated to create your own TV show like an HGTV studio for kids using the mini-kitchen sets they sell. Then kids and their parents could upload to their own Facebook pages and feature them on YouTube. Do I smell viral videos? Kids and the clever things they say and do?

In other words, they could have realized they were providing a world of playfulness, and not a place to just purchase toys.

Have a Voice or Don’t Be Heard

Every brand needs a voice. To be relevant, to be meaningful, you have to pay attention, and that’s what Toys “R” Us forgot to do. In this case, the retail toy giant was more like Robin Williams in Peter Pan where he’d forgotten how to play, have fun and smile.

Something no brand can ever forget to do.

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Ranked #3 Worldwide on Klout for Branding, David Brier is a Fast Company expert blogger whose work has been featured in ADWEEK, Forbes, INC, Business Insider and Huffington Post. Shark Tank investor Daymond John only states, “David Brier is brilliant with branding” and presented David with the Presidential Ambassador for Global Entrepreneurship medallion. A native New Yorker, David is a highly sought-after internationally award-winning designer and rebranding specialist.